Morton

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

KAREN ELIZABETH MORTON, §

§

Plaintiff, §

§

VS. § CIVIL ACTION NO. 4:24-cv-1107-P

§

LAKEVIEW LOAN SERVICING, LLC, §

§

Defendant. §

FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE UNITED STATES

MAGISTRATE JUDGE RECOMMENDING GRANTING DEFENDANT’S MOTION TO

DISMISS

Pending before the Court is Defendant Lakeview Loan Servicing, LLC’s Motion to

Dismiss [doc. 27], filed May 13, 2025. Having carefully considered the motion, responses, and

applicable law, the Court RECOMMENDS that Defendant’s Motion to Dismiss be GRANTED.

I. RELEVANT FACTUAL BACKGROUND

On February 3, 2021, pro se Plaintiff Karen Elizabeth Morton (“Plaintiff”) and her ex-

husband granted to the Service Mortgage Company a lien against the property located at 4005

Frisco Court, Granbury, Texas 76048, to secure repayment of a note in the original principal

amount of $257,254. (See Plaintiff’s Verified First Amended Complaint (“Pl.’s Am. Compl.”) at

2.) A week later the loan was assigned to Defendant Lakeview Loan Servicing, LLC (“Defendant”

or “Lakeview”). (Id.) Defendant has retained the loan since that assignment. (Id.) Plaintiff paid

her mortgage to Defendant in compliance with the loan agreement for years. (Id. at 22.)

Subsequently, Plaintiff claims that her monthly payment inexplicably quadrupled, she was

let go from her job as a nurse twice, and she was in a series of near fatal accidents. (Id. at 3-4.)

As a result, Plaintiff contacted Defendant for assistance but was not satisfied with Defendant’s

responses. (Id. at 3.) Thus, Plaintiff hired a mortgage investigator who, she alleges, “uncovered

a number of inconsistencies and errors made by Defendant Lakeview in the servicing of the loan.”

(Id. at 4.) The investigator informed Plaintiff and Plaintiff now believes that by “stamping the

Note in blank and placing the Note in a REMIC [Defendant] has rendered the Note a legal nullity

and the Deed of trust unenforceable.” (Id. at 11.)1 On an unknown date, Plaintiff defaulted on her

payment obligations either because she believed that the note was no longer enforceable or because

of the situations set forth above. (Id. at 5.) As a result, Plaintiff received a Notice of Foreclosure

from Defendant. (Id.)

Thereafter, on November 1, 2024, Plaintiff sued Defendant in the 355th District Court of

Hood County, Texas, and obtained a temporary restraining order preventing a November 5, 2024,

foreclosure sale. (Notice of Removal, Temporary Restraining Order and Order Setting Hearing

for Temporary Injunction (“Notice of Removal”) at 1-2.) On November 12, 2024, Defendant

removed the case to this Court. (Notice of Removal at 1.) On January 9, 2025, Defendant moved

to dismiss the case under Federal Rule of Civil Procedure (“Rule”) 12(c). (See Lakeview’s First

Motion to Dismiss at 3.) In response to Lakeview’s Motion to Dismiss, Plaintiff filed a motion

requesting leave to amend her live pleading. (See Plaintiff’s Motion for Leave to Amend Petition

at 1.) The Court granted Plaintiff leave to amend and gave her “a final opportunity to amend her

complaint to plead her ‘best case’ prior to considering Defendant[’s]” motion to dismiss. (Order

Granting Plaintiff’s Motion for Leave to Amend Petition (“Order Granting Leave to Am.”) at 1.)

1 This exact same theory, proposed by this exact same mortgage investigator, Joseph R. Esquivel, Jr., has

been resoundingly rejected by federal courts throughout the country, and, consequently, the Court rejects such theory

as a basis for any of Plaintiff’s claim. See, e.g., Lakeview Loan Servicing, LLC v. Mobley, No. 1:16-CV-4572-MHC

, 2022 WL 552740, at *3 (N.D. Ga. Jan. 13, 2022); Branch Banking & Tr. Co. v. Lanier, 585 F. App’x 123, 123 (4th

Cir. 2014) (affirming rejection of Esquivel’s claims); Bisi v. Chase Auto J.P. Morgan Chase Bank, N.A., No. 2:23-

CV-02508-KJM-CSK (PS), 2024 WL 3470916, at *2 (E.D. Cal. July 19, 2024).

As a result, Plaintiff filed her Verified First Amended Complaint (“Amended Complaint”) [doc.

9] on May 16, 2025.

In Plaintiff’s Amended Complaint, she alleges the following twelve claims against

Defendant: (1) injunctive relief and application for temporary restraining order (“TRO”), (2)

declaratory relief, (3) common law wrongful foreclosure, (4) breach of contract, (5) violations of

the Federal Real Estate Settlement Procedures Act (“RESPA”), (6) violations of the Truth in

Lending Act (“TILA”), (7) violations of the Texas Fair Debt Collection Practices Act

(“TFDCPA”), (8) violations of the Federal Fair Debt Collection Practices Act (“FDCPA”), (9)

violations of the Fair Credit Reporting Act (“FCRA”), (10) negligent misrepresentation, (11)

negligence, and (12) fraud in a real estate transaction in violation of Texas Business & Commerce

Code § 27.01. (See Pl.’s Am. Compl. at 6-24.) In its motion, Defendant argues that the Court

should dismiss all of Plaintiff’s claims for failure to state a claim under Rule 12(b)(6). (See

generally Lakeview’s Motion to Dismiss Plaintiff’s Amended Complaint (“Def.’s Mot. to

Dismiss”).) The Court will address each count in turn.

II. LEGAL STANDARD

Rule 12 (b)(6) authorizes the dismissal of a complaint that fails “to state a claim upon which

relief can be granted.” Fed. R. Civ. P. 12(b)(6). This rule must be interpreted in conjunction with

Federal Rule of Civil Procedure 8(a), which sets forth the requirements for pleading a claim for

relief in federal court. Rule 8(a) calls for “a short and plain statement of the claim showing that

the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2); see also Swierkiewicz v. Sorema N.A., 534

U.S. 506, 513 (2002) (holding that Rule 8(a)’s simplified pleading standard applies to most civil

actions). The Court must accept as true all well-pleaded, non-conclusory allegations in the

complaint and liberally construe the complaint in favor of the plaintiff. Kaiser Aluminum & Chem.

Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982).

The plaintiff must, however, plead specific facts, not mere conclusory allegations, to avoid

dismissal. Guidry v. Bank of LaPlace, 954 F.2d 278, 281 (5th Cir.1992). Indeed, the plaintiff

must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007). “Factual allegations must be enough to raise a right to relief

above the speculative level, . . . on the assumption that all the allegations in the complaint are true

(even if doubtful in fact).” Id. at 555 (citations omitted). The Court need not credit bare conclusory

allegations or “a formulaic recitation of the elements of a cause of action.” Id. Rather, “[a] claim

has facial plausibility when the plaintiff pleads factual content that allows the court to draw the

reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,

556 U.S. 662, 678 (2009).

“Generally, a court ruling on a motion to dismiss may rely on only the complaint and its

proper attachments. A court is permitted, however, to rely on documents incorporated into the

complaint by reference, and matters of which a court may take judicial notice.” Dorsey v. Portfolio

Equities, Inc., 540 F.3d 333, 338 (5th Cir. 2008) (citations and internal quotation marks omitted).

“A written document that is attached to a complaint as an exhibit is considered part of the

complaint and may be considered in a 12(b)(6) dismissal proceeding.” Ferrer v. Chevron Corp.,

484 F.3d 776, 780 (5th Cir. 2007). In addition, a “court may consider documents attached to a

motion to dismiss that ‘are referred to in the plaintiff’s complaint and are central to the plaintiff’s

claim.’” Sullivan v. Leor Energy, LLC, 600 F.3d 542, 546 (5th Cir. 2010) (quoting Scanlan v. Tex.

A & M Univ., 343 F.3d 533, 536 (5th Cir. 2003)). If a court determines that dismissal of a claim

is appropriate, it should be with prejudice if amending the claim would be futile or “the plaintiff

has alleged his best case.” Jones v. Greninger, 188 F.3d 322, 327 (5th Cir. 1999); see Schiller v.

Physicians Res. Group, Inc., 342 F.3d 563, 566 (5th Cir.2003).

III. DISCUSSION

A. Counts 1 and 2: Injunctive Relief and Application for TRO and Declaratory

Relief

To begin with, Plaintiff requests that the Court issue a temporary injunction enjoining any

attempted foreclosure of her property. (Pl.’s Am. Compl. at 7-8.) In addition, Plaintiff seeks a

declaration that Defendant “does not have and lacks authority to proceed with the foreclosure or

any collection actions on the note or deed of trust.” (Pl.’s Am. Compl. at 10.) Injunctive and

declaratory relief are forms of relief that depend on the success of underlying claims. See Collin

Cty. v. Homeowners Ass’n for Values Essential to Neighborhoods, 915 F.2d 167, 170-71 (5th Cir.

1990) (declaratory relief); Cook v. Wells Fargo Bank, N.A., No. 3:10-CV-0592-D, 2010 WL

2772445, at *4 (N.D. Tex. July 12, 2010) (injunctive relief).

Thus, when a Court determines “that none of Plaintiffs claims can withstand dismissal . .

. requests for declaratory and injunctive relief . . . cannot survive.” Johnson v. Wells Fargo Bank,

NA, 999 F. Supp. 2d 919, 935 (N.D. Tex. 2014). As discussed below, the Court is recommending

dismissal of all of Plaintiff’s other claims. Consequently, the Court RECOMMENDS that

Defendant’s Motion to Dismiss as to Plaintiff’s requests for declaratory judgment and injunctive

relief be GRANTED and such claims be DISMISSED WITH PREJUDICE.

B. Count 3: Common Law Wrongful Foreclosure

In its motion, Defendant argues that Plaintiff has failed to state a claim for wrongful

foreclosure because (1) “[n]owhere in Ms. Morton's petition does she allege any facts suggesting

. . . [her] property [was] sold for a grossly inadequate sales price” and (2) no foreclosure sale has

occurred. (Def.’s Mot. to Dismiss at 6-7.) The Court agrees.

“In Texas, the elements of a wrongful foreclosure claim are ‘(1) a defect in the foreclosure

sale proceedings; (2) a grossly inadequate selling price; and (3) a causal connection between the

defect and the grossly inadequate selling price.’” Biggers v. BAC Home Loans Servicing, LP, 767

F. Supp. 2d 725, 729 (N.D. Tex. 2011) (quoting Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135,

139 (Tex.App.2008, no pet.)). Because an inadequate selling price is a necessary element of a

wrongful foreclosure claim, “a foreclosure sale is a precondition to recovery.” Id. at 730. Plaintiff

has failed to allege in her Amended Complaint or in her responses that a foreclosure sale has

occurred. Consequently, the Court RECOMMENDS that Defendant’s Motion to Dismiss be

GRANTED as to Plaintiff claim for wrongful foreclosure and that such claim be DISMISSED

WITHOUT PREJUDICE.

C. Count 4: Breach of Contract

Next, Defendant argues that Plaintiff has failed to state a claim for breach of contract

because “she does not identify a specific contractual provision that was allegedly breached or tie

the failure to respond to her purported ‘qualified written requests’ to the deed of trust or note.”

(Def.’s Mot. Dismiss at 7.)2 Once again, the Court agrees.

In Texas, the elements of a breach of contract claim “are: (1) the existence of a valid

contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by

the defendant; and (4) damages sustained by the plaintiff as a result of the breach.” Smith Int'l,

Inc. v. Egle Grp., LLC, 490 F.3d 380, 387 (5th Cir. 2007) (quoting Valero Mktg. & Supply Co. v.

Kalama Int’l, L.L.C., 51 S.W.3d 345, 351 (Tex. App.—Houston [1st Dist.] 2001, no pet.)). For a

breach of contract claim involving a note or “deed of trust [a plaintiff] must identify the specific

provision in the contract that was breached.” Williams v. Wells Fargo Bank, N.A., 560 F. App’x

2 Quotation marks omitted.

233, 238 (5th Cir. 2014). Further, when a plaintiff “fail[s] to allege they were current on their

payments under the deed of trust, dismissal of their breach of contract claim is proper.” Id. In this

case, Plaintiff has failed to specify in her Amended Complaint or in her responses which specific

provision of the note or the deed of trust has been breached or that she was current on her payments.

Consequently, the Court RECOMMENDS that Defendant’s Motion to Dismiss be GRANTED

as to Plaintiff’s claims for breach of contract and that such claim be DISMISSED WITH

PREJUDICE.

D. Count 5: RESPA Violations

1. 12 C.F.R. §§ 1024.35 and 1024.36

Defendant further argues in its Motion to Dismiss that Plaintiff has failed to state a claim

for violations of 12 C.F.R. § 1024.35 and § 1024.36, which are the RESPA implementing

regulations, because she does not allege in her Amended Complaint that she sent her

communications to Defendant’s exclusive qualified written request (“QWR”) office and address.

(See Def.’s Mot. Dismiss at 10-11.) The Court again agrees.

Sections 1024.35 and 1024.36 govern the procedures a loan servicer must follow when it

receives a QWR requesting information about a loan it is servicing or when it receives a QWR

informing it of an error relating to the servicing of one of its loans. See 12 C.F.R. §§ 1024.35-

36. “Where a servicer complies with the notice requirements for designating an exclusive QWR

office and address, a letter sent to a different office and address is not considered a QWR under

RESPA.” Geoffrion v. Nationstar Mortg. LLC, 182 F. Supp. 3d 648, 658 (E.D. Tex. 2016)

(collecting cases). When a “servicer has established a separate and exclusive office and address

for the receipt and handling of QWRs, that servicer’s duty to respond is triggered only if the

borrower sends his or her written request to the designated office and address.” Id. In this case,

Plaintiff has failed to allege in her Amended Complaint or in her responses whether any of the

communications to Defendant were sent to Defendant’s designated QWR office or that

Defendants have not designated a QWR address. Thus, Plaintiff has not alleged that a duty arose

under § 1024.35 and § 1024.36.

2. 12 C.F.R. § 1024.41

Defendant also argues that Plaintiff has failed to state a claim for a violation of RESPA

implementing regulation 12 C.F.R. § 1024.41 because she has only summarily alleged that

Defendant has not offered her “loss mitigation.” (See Def.’s Mot. Dismiss at 13.) The Court

agrees.

To successfully plead a claim under § 1024.41 Plaintiff must, among other requirements,

allege facts establishing that “the loan modification application [she] submitted . . . was [her] first

complete loss mitigation application . . . [or] that [she] became current on [her] payments after

[Defendant] considered any previous complete loss mitigation application.” Ruiz v. PennyMac

Loan Servs., LLC, No. 3:18-CV-1544-D, 2018 WL 4772410, at *2 (N.D. Tex. Oct. 3, 2018) (citing

Solis v. U.S. Bank, N.A., 726 Fed. Appx. 221, 223 (5th Cir. 2018)). The entirety of Plaintiff’s

allegations specifically referencing § 1024.41 are that “Defendant has not made one attempt at loss

mitigation with Plaintiff [] in violation of 12 C.F.R. §1024.41.” (Pl.’s Am. Compl. at 19.) Thus,

Plaintiff has clearly failed to allege either that she submitted a first complete loss mitigation

application or that she became current on her payments after a previous complete loss mitigation

application. Consequently, the Court RECOMMENDS that Defendant’s Motion to Dismiss be

GRANTED as to Plaintiff’s claims for violations of RESPA and that such claims be DISMISSED

WITH PREJUDICE.3

3 The Court notes that Plaintiff also claims that Defendant violated 12 C.F.R. §§ 1024.31 and 1024.38. (Pl.’s

Am. Compl. at 18-19.) However, Plaintiff’s allegations as to section 1024.31 fail because it is a list of definitions

E. Count 6: TILA

1. 12 C.F.R. § 1026.36

Defendant further argues in its Motion to Dismiss that Plaintiff’s claims under TILA

implementing regulation 12 C.F.R. § 1026.36 must be dismissed because Plaintiff has failed to

state a claim as § 1026.36 does not require Defendant to provide periodic mortgage statements as

Plaintiff asserts. (Def.’s Mot. to Dismiss at 16-17.) Again, the Court agrees.

Section 1026.39 of the TILA requires that anyone who “becomes the owner of an existing

mortgage loan” to “mail or deliver” a disclosure of this transfer within thirty days of this transfer.

See 12 C.F.R. § 1026.39. A violation of this section “must be brought within one year from the

date of the occurrence of the violation.” Bell v. Wells Fargo Bank, N.A., No. 4:14-CV-388-Y,

2017 WL 6761770, at *3 (N.D. Tex. Oct. 13, 2017). The violation occurs thirty days after “a

transfer or assignment” of the loan in the case of nondisclosure. Id. In other words, “the [one-

year] statute of limitations begins to run . . . thirty days” after the assignment or transfer of a loan.

Id.

In this case, Plaintiff’s loan was assigned to Defendant on February 14, 2023. (See Pl.’s

Am. Compl., Ex. 9 at 1.) Thus, if Plaintiff never received notice of the transfer or assignment of

her loan, any claim under § 1026.39 must have been asserted no later than March 16, 2024, which

is thirty days after the transfer of her loan. See Bell, 2017 WL 6761770, at *3. As Plaintiff did

not file suit until November 1, 2024, her claim under section 1026.39 is time barred. (Original

Petition and Application from Temporary Restraining Order at 1.)

applicable to the subpart of the provision and, thus, does not impose liability. See 12 CFR § 1024.31. Further,

Plaintiff’s claims for violations of 12 CFR § 1024.38 in both counts five and six fail because, this regulation “does not

provide a private right of action.” Wilson v. Deutsche Bank Tr. Co., Series 2006-QS5, No. 3:18-CV-0854-D, 2019

WL 5840325, at *13 (N.D. Tex. Nov. 7, 2019). Thus, Plaintiff has failed to state a claim under either section against

Defendant.

2. 12 C.F.R. § 1026.39

Defendant also argues in its Motion to Dismiss that Plaintiff’s claims under TILA

implementing regulation 12 C.F.R. § 1026.39 must be dismissed because Plaintiff’s claims are

time barred. (Def.’s Mot. to Dismiss at 16-17.)

Section 1026.36 of the TILA “deals with servicing practices related to payments and the

application of payments,” not to periodic mortgage payments. Garza v. DHI Mortg. Co., No.

419CV00780SDJCAN, 2020 WL 7700620, at *9 (E.D. Tex. Nov. 12, 2020), report and

recommendation adopted, No. 4:19-CV-780, 2020 WL 7698832 (E.D. Tex. Dec. 28, 2020).

Plaintiff, alleges that Defendants violated 12 C.F.R. § 1026.36 by “fail[ing] to provide periodic

mortgage statements.” (Pl.’s Am. Compl. at 19.) However, as set forth above, § 1026.36 does not

discuss or require periodic mortgage statements. See Garza, 2020 WL 7700620, at *9. Thus,

Plaintiff’s allegations are completely unmoored from the regulation she cites as the basis of her

claims. Based on the foregoing, the Court RECOMMENDS that Defendant’s Motion to Dismiss

be GRANTED as to Plaintiff’s claims for violations of the TILA and that such claims be

DISMISSED WITH PREJUDICE.

F. Count 7: Texas Fair Debt Collection Practices Act

Next, Defendant argues that any claim by Plaintiff for violations of the TFDCPA must be

dismissed because Plaintiff’s allegations under the TFDCPA amount to little more than “general

assertions of wrongful charges.” (Def.’s Mot. Dismiss at 18.) The Court agrees.

In her Amended Complaint, Plaintiff alleges that Defendant violated two sections of the

TFDCPA. (Pl.’s Am. Compl. at 20.) First, Plaintiff, in conclusory fashion, alleges that Defendant

violated Ҥ 392.303(2) by attempting to collect a debt it is not entitled to, and charging interest and

late fees on same in violation of the act.” (Id.) Plaintiff’s second allegation relating to the

TFDCPA is that Defendant violated § 392.304 “by failing to disclose to whom the Note and

therefore any debt is actually owed to or by whom is entitled to collect same is a fraudulent,

deceptive and misleading act.” (Id.)

As set forth above, the Court has already rejected the legal basis of Plaintiff’s claim under

TFDCPA § 392.303(f) by finding that the way the loan was transferred to Defendant did not render

it void. Thus, Plaintiff’s claim under TFDCPA § 392.303(2) fails. See, e.g., Lakeview Loan

Servicing, LLC, 2022 WL 552740, at *3; Branch Banking & Tr. Co., 585 F. App’x at 123

(affirming rejection of Esquivel’s claims); Bisi, 2024 WL 3470916, at *2. However, even

assuming the Court did not reject the legal basis of this claim, it still fails because a “general

assertion of wrongful charges are insufficient to state a claim under Section 392.303(a)(2)” and

she has failed to specify any specific fees or penalties incidental to her loan. See Williams, N.A.,

560 F. App’x at 240.

As to Plaintiff’s claim under § 392.304 of the TFDCPA, Plaintiff, in essence, alleges that

Defendant committed a fraudulent, deceptive, and misleading act, and thus violating the TFDCPA,

by not informing her of the true owner of her loan. (Pl.’s Am. Compl. at 20.) These allegations

fail to state a claim because they are nothing more than “legal conclusion[s] couched as a factual

allegation.” Bell Atl. Corp., 550 U.S. at 555. In other words, Plaintiff’s claim under § 392.304

fails because she does not even attempt to connect or explain how a failure to disclose who owns

the note or to who the debt is owed is a deceptive, misleading, or fraudulent act under the TFDCPA.

Based on the foregoing, the Court RECOMMENDS that Defendant’s Motion to Dismiss

be GRANTED as to Plaintiff’s claims for violations of the TFDCPA and that such claims be

DISMISSED WITH PREJUDICE.

G. Count 8: Federal Fair Debt Collection Practices Act

Defendant further argues in its Motion to Dismiss that any claim by Plaintiff for violations

of the FDCPA must be dismissed because the FDCPA only applies to debt collectors and

Defendant is not a debt collector as defined in the FDCPA. (Def.’s Mot. Dismiss at 21.) The

Court again agrees with Defendant.

The FDCPA only applies to debt collectors. See Heintz v. Jenkins, 514 U.S. 291, 292

(1995). The FDCPA defines a debt collector as “any person . . . who regularly collects or attempts

to collect . . . debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6).

However, an entity is excluded from the definition of debt collector if it obtains “the debt [prior

to] default.” Raburn v. Cmty. Mgmt., L.L.C., 761 F. App’x 263, 266 (5th Cir. 2019) (citing 15

U.S.C. § 1692a(6)(F)). As a logical result, “a debt collector does not include [a] consumer’s

creditors, a mortgage servicing company, or an assignee of a debt, as long as the debt was not in

default at the time it was assigned.” Perry v. Stewart Title Co., 756 F.2d 1197, 1208 (5th Cir.

1985).

In this case, Plaintiff has failed to adequately allege that Defendant is a debt collector. In

fact, Plaintiff alleges that “Defendant is a ‘creditor’ as defined in the act,” not a debt collector.

(Pl.’s Am. Compl. at 21.) The “FDCPA specifically excludes creditors who, while using their own

names, attempt direct collection of debts owed to them.” Bacon v. Sw. Airlines Co., No.

CIV.A.3:97-CV-2211-L, 1999 WL 134569, at *2. However, even if Plaintiff alleged that

Defendant is a debt collector, her claim still fails because she has not alleged that Defendant

obtained the debt prior to default. See Perry, 756 F.2d at 1208. In fact, Plaintiff cannot make such

a claim because she has “for years paid Defendant” her mortgage payment.” (Pl.’s Am. Compl. at

22.) Consequently, the Court RECOMMENDS that Defendant’s Motion to Dismiss be

GRANTED as to Plaintiff’s claims for violations of FDCPA and that such claims be DISMISSED

WITH PREJUDICE.

H. Count 9: Fair Credit Reporting Act

Plaintiff further alleges that Defendant violated 15 USC § 1681e(b) of the FCRA4 by

“unfairly and inaccurately reporting negative actions on Plaintiff[’]s credit score.” (Pl.’s Am.

Compl. at 21.) Defendant argues that Plaintiff’s claim fails because § 1681e(b) only applies to

credit reporting agencies. (Def.’s Mot. Dismiss at 21.) The Court agrees.

As argued by Defendant, section 1681e(b) only applies when “a consumer reporting agency

prepares a consumer report.” 15 U.S.C. § 1681e(b). The term consumer reporting agency means

any person

which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly

engages in whole or in part in the practice of assembling or evaluating consumer

credit information or other information on consumers for the purpose of furnishing

consumer reports to third parties[.]

15 U.S.C. § 1681a(f). Plaintiff has not alleged that Defendant is a credit reporting agency nor

has Plaintiff alleged that Defendant meets any of the above-mentioned requirements of a credit

reporting agency. Consequently, the Court RECOMMENDS that Defendant’s Motion to

Dismiss be GRANTED as to Plaintiff’s claims for violations of the FCRA and that such claims

be DISMISSED WITH PREJUDICE.

I. Count 10: Negligent Misrepresentation

Next, Defendant argues that Plaintiff’s claim for negligent misrepresentation must be

dismissed because it is barred by the economic loss rule. (Def.’s Mot. Dismiss at 24.) Specifically,

Defendant argues that the economic loss rule applies because Plaintiff’s claim flows solely from

4 The Court notes that Plaintiff appears to also be asserting a claim under 15 USC § 1681a(d). However, §

1681a(d) only defines what a consumer report is and does not provide a private right of action.

obligations created by the note and deed of trust and she does not plead an injury independent of

the same. (See Def.’s Mot. Dismiss at 24.) Once again, the Court agrees.

Under Texas law, the economic loss “rule generally precludes recovery in tort for economic

losses resulting from the failure of a party to perform under a contract.” Lamar Homes, Inc. v.

Mid-Continent Cas. Co., 242 S.W.3d 1, 12 (Tex. 2007). “Texas courts consistently have

prohibited tort claims if the parties’ relationship and attendant duties arise from a contract.”

DeFranceschi v. Wells Fargo Bank, N.A., 837 F. Supp. 2d 616, 625 (N.D. Tex. 2011) (collecting

cases). If, absent the contractual relationship with the defendant, a plaintiff’s “non-contractual

claim of negligent misrepresentation would not exist[,]” dismissal is appropriate under the

economic loss rule. See id.

The basis of Plaintiff’s negligent representation claim is that Plaintiff “for years paid

Defendant when Defendant did not have authority, permission or the ability to collect on the note.”

(Pl.’s Am. Compl. at 22.) These allegations are intimately and inseparably linked to the contracts

at issue in this case—the note and the deed of trust—because without them there would have been

nothing for Defendant to allegedly misrepresent. As set forth above, because, absent the existence

of the deed of trust and note, Plaintiff’s “non-contractual claim of negligent misrepresentation

would not exist,” dismissal under the economic loss rule is proper. DeFranceschi, 837 F. Supp.

2d at 625; Iacobucci v. Wells Fargo Bank, No. 3:13-CV-1425-B, 2013 WL 6061343, at *10 (N.D.

Tex. Nov. 15, 2013) (when a plaintiff’s allegations “flow from [her] mortgage and [a]

Defendant[‘s] attempt to foreclose thereon . . . a tort cause of action is likely otherwise

unavailable”), aff’d sub nom., Iacobucci v. Wells Fargo, N.A., 567 Fed. App’x 257 (5th Cir. 2014).

Consequently, the Court RECOMMENDS that Defendant’s Motion to Dismiss be GRANTED

as to Plaintiff’s claim for negligent misrepresentation and that such claim be DISMISSED WITH

PREJUDICE.

J. Count 11: Negligence

Defendant also argues that Plaintiff’s claim for negligence fails because Defendant “owes

no duties to her independent of the loan agreement.” (Def.’s Mot. Dismiss at 25.) The Court

agrees.

“The elements of a negligence cause of action are a duty, a breach of that duty, and damages

proximately caused by the breach of duty.” Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d

472, 477 (Tex. 1995). “The existence of a duty is a question of law.” Nabors Drilling, U.S.A.,

Inc. v. Escoto, 288 S.W.3d 401, 404 (Tex. 2009). Texas law “does not impose a legal duty on a

mortgagee to a mortgagor that would give rise to a negligence claim.” Vinson v. Amerihome

Mortg. Co., LLC, No. 4:22-CV-0928-P, 2023 WL 2895251, at *2 (N.D. Tex. Apr. 11, 2023); Del

Rio Trejo v. Bank of Am., N.A., No. 3:19-CV-01406-L, 2020 WL 982004, at *2 (N.D. Tex. Jan.

21, 2020); see also Scott v. Bank of Am., N.A., 597 F. App'x 223, 225 (5th Cir. 2014) (noting that

there is no legal duty between parties to a contract absent some special relationship between them

and holding that no such special relationship exists between mortgagor and mortgagee). The basis

of Plaintiff’s negligence claim is that Defendant owed her “a duty as outlined in the Deed of Trust.”

(Pl.’s Am. Compl. at 23.) As the duty alleged by Plaintiff is not independent of the loan agreement,

it cannot sustain a claim for negligence.5 See Vinson, 2023 WL 2895251, at *2. Consequently,

the Court RECOMMENDS that Defendant’s Motion to Dismiss be GRANTED as to Plaintiff’s

claim for negligence and such claim be DISMISSED WITH PREJUDICE.

5 The Court also notes that this conclusion would also require dismissal of Plaintiff’s negligence claim

under the economic loss rule discussed under count ten, negligent misrepresentation.

K. Count 12: Fraud in Real Estate Transaction

Next, Defendant argues that Plaintiff’s “statutory fraud claim fails as a matter of law

because Texas Business & Commerce Code § 27.01 only applies to claims in which she was

induced to enter into a contract with Lakeview for the purchase of real estate or stock.” (Def.’s

Mot. to Dismiss at 27.) Once again, the Court agrees.

Texas Business & Commerce Code § 27.01 “applies only to fraud in real estate or stock

transactions.” Dorsey, 540 F.3d at 343 (citing Tex. Bus. & Com. Code Ann. § 27.01(a)(1)). A

“loan transaction, even if secured by land, is not considered to come under the statute.” Id.

(quoting Burleson State Bank v. Plunkett, 27 S.W.3d 605, 611 (Tex. App. 2000)). Plaintiff’s

allegations of fraud revolve around “the Note and foreclosure per the terms of the Deed of Trust,

and the fact that the monthly statements and payments were extremely inaccurate and inflated.”

As none of these allegations involve the purchase of real estate or stock transactions, her claim

fails as a matter of law. Consequently, the Court RECOMMENDS that Defendant’s Motion to

Dismiss be GRANTED as to Plaintiff’s claim for statutory fraud and that such claim be

DISMISSED WITH PREJUDICE.

IV. CONCLUSION

For the reasons set forth above, the Court RECOMMENDS that Defendant Lakeview

Loan Servicing, LLC’s Motion to Dismiss [doc. 27] be GRANTED.6

6 As set forth above, a dismissal with prejudice is appropriate when amending a complaint would be futile,

Schiller, 342 F.3d at 566, or “if the court determines the plaintiff has alleged his best case.” Jones, 188 F.3d at 327.

The Court finds that Plaintiff has plead her best case because this is Plaintiff’s third petition or complaint, and the

Court has already given Plaintiff “a final opportunity to amend her complaint to plead her ‘best case’ prior to

considering Defendant[’s]” motion to dismiss. (Order Granting Leave to Am.at 1.) Thus, the Court is recommending

dismissal with prejudice of counts one, two, five, six, eight, nine, ten, eleven, and twelve as futile and because Plaintiff

has alleged her best case. The Court is also recommending dismissal with prejudice of counts four and seven because

Plaintiff has alleged her best case. Finally, the Court is recommending that count three be dismissed without prejudice.

NOTICE OF RIGHT TO OBJECT TO PROPOSED

FINDINGS, CONCLUSIONS AND RECOMMENDATION

AND CONSEQUENCES OF FAILURE TO OBJECT

Under 28 U.S.C. § 636(b)(1), each party to this action has the right to serve and file specific

written objections in the United States District Court to the United States Magistrate Judge’s

proposed findings, conclusions, and recommendation within fourteen (14) days after the party has

been served with a copy of this document. The United States District Judge need only make a de

novo determination of those portions of the United States Magistrate Judge’s proposed findings,

conclusions, and recommendation to which specific objection is timely made. See 28 U.S.C. §

636(b)(1). To be specific, an objection must identify the specific finding or recommendation to

which objection is made, state the basis for the objection, and specify the place in the Magistrate

Judge’s Findings, Conclusions, and Recommendation where the disputed determination is found.

Failure to file, by the date stated above, a specific written objection to a proposed factual finding

or legal conclusion will bar a party, except upon grounds of plain error or manifest injustice, from

attacking on appeal any such proposed factual findings and legal conclusions accepted by the

United States District Judge. See Douglass v. United Servs. Auto Ass’n, 79 F.3d 1415, 1428–29

(5th Cir. 1996) (en banc), modified by statute on other grounds, 28 U.S.C. § 636(b)(1) (extending

the time to file objections to 14 days).

ORDER

Under 28 U.S.C. § 636, it is hereby ORDERED that each party is granted until October

16, 2025, to serve and file written objections to the United States Magistrate Judge’s proposed

findings, conclusions and recommendation. It is further ORDERED that if objections are filed

and the opposing party chooses to file a response, the response shall be filed within seven (7) days

of the filing date of the objections.

SIGNED October 2, 2025. — 4

C rho.

STATES MAGISTRATE JUDGE

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